Last Updated on October 25, 2023 by CREW Editorial
Home affordability for first-time buyers is set to take another hit in the coming months as rising prices are exacerbated by rising mortgage costs.
In its latest economic forecast, Scotiabank calls for an 8% rise in mortgage carrying costs for new buyers in 2018 with an additional 4% rise in 2019.
The lender says existing borrowers should be largely insulated from the increases as their fixed-term loans are rolled over at rates comparable to or lower than those secured at origination.
Scotiabank believes that Canada’s housing cycle has likely peaked with policy changes, affordability issues and higher borrowing costs all playing a part.
While the bank expects low unemployment and foreign capital inflow to continue to support the market along with increased household formation, its report states “we anticipate some moderation in home sales over the forecast horizon, as rising borrowing costs and tougher mortgage-qualification criteria lead to some further erosion in affordability, especially for first-time buyers in major urban markets.”
New home construction will likely ease due to a moderated resale market but supply is still expected to remain elevated.
Steve Randall has more than three decades of media experience encompassing online, newspapers, magazines, radio, and podcasts. He focuses on insights and news for professionals in finance, real estate, and legal services. Steve writes for multiple Key Media titles in Canada, United States, Australia, and New Zealand.
